Sourcing Assignments - bryankaetz.files.wordpress.com

K a e t z – S o u r c i n g : B a n g l a d e s h | 1

Sourcing Assignments

Bryan Kaetz | Spring 2018

Johnson & Wales University | Fashion Merchandising & Retailing

RTL 2005 – Global Sourcing | Dr. Laura Egeln

1. Sourcing Project: Bangladesh – Human Resource Manager . . . . . . . . . . . . . . . . . . . page 2

2. Executive Summary: Bangladesh Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 7

3. Presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 10

4. Works Cited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 23

Appendix:

1. Pre-Work Assignments

a. Assignment 1: Global Trade & Consumption

b. Assignment 2: Human Resources

c. Assignment 3: The Multifiber Arrangement & Quotas

2. Objectives, Procedure, and Format

3. Area of Expertise Guidelines


Sourcing Project: Bangladesh Human Resource Manager

Bryan Kaetz | RTL 2005 – Global Sourcing | May 9th, 2018


Bangladesh is located in the Asian continent, specifically South Asia, and borders India and Myanmar.

The country is known as The People’s Republic of Bangladesh. The majority of Bangladesh is covered by the

Bengal delta, one of the largest deltas on Earth. (“World”) Bangladesh has a tropical monsoon climate, with

heavy rainfall being common in this part of the world. Its climate gives Bangladesh its six seasons in a year,

including a monsoon season. Due to climate change, the number of seasons has seemingly reduced, leaving

it with fewer, warmer seasons. Due to this monsoon climate, the likelihood of natural disasters of the

monsoon variety are high, if not definite. This ranges from floods, tropical cyclones, tornadoes, to tidal bores

annually. (Sunghobol) Bangladesh has a wealth of natural resources and is dependent upon their agricultural

industry, which is also their largest employment sector (U.S.). Rice and jute are currently their primary crops,

but there is becoming a greater focus on higher-value crops, such as wheat. This shift is causing a change in

the agricultural sector through great increases in income, production, and employment (“Growing”). A large

percentage of employment is within agriculture, up to fifty percent (“Growing”). The second largest industry

in Bangladesh is garment and apparel production. Infrastructure in Bangladesh is also somewhat limited.

While 87% of the population has access to clean drinking source, only 60% have access to improved

santitation facilties and another 40% to unimproved sanitation facilities. Along with this, only about 60% of

the population has access to electricity. (“World”)

The population level of Bangladesh is about 157 million people as of July 2017 (“World”). This is a

large population for a country with a comparatively small amount of land, creating a great density of people

in cities. Bangladesh has roughly half of the population of the United States in an area slightly smaller than

the state of Iowa (“World”). The CIA World Factbook also shows that the population has a growth rate of

1.04%, an infant mortality rate of 31.7 deaths out of 1,000 live births, and a life expectancy of about 73

years. Bengali are the overwhelming majority ethnic group at 98%, but the government does recognize


about 27 other ethnic groups tanks to the 2011 census (“World”). The official language is Bangla, or Bengali,

with nearly 99% usage rate. The religion breakdown of the country is as follows: 89.1% Muslim, 10% Hindu,

with the rest categorized as other at 0.9%, including Buddhist and Christian (“World”). Bangladesh has

experienced great political upheaval since the mid- to late-1900s. Bangladesh was previously considered

East Pakistan, as it was under Pakistan rule until it won its independence in 1971. Following this, rule of

Bangladesh underwent coup attempts, military-backed rule, parliamentary rule, and finally returned back to

fully democratic rule as recently as 2008 (“World”). This type of parliamentary republic government system

is still in place today.

The skills of the labor force, which is approximately 73.41 million of the country’s population, in

Bangladesh are varied (“World”). The majority of training is focused on computing, agriculture, and ready-

made garments. Little training is given in regard to leather and textile, thus showing that this country does

not develop textiles themselves and focuses on the manufacturing of the end product to export (ADB 3). The

education level of the workforce is low, with over a fifth of the labor force having no formal education, but

the majority (30%) has up to secondary education yet another 28% only achieved up to a primary education

(ADB 2). Literacy rates are approximately 73% (“World”). Generally, the training and education received by

the labor force in Bangladesh is not consistent with the needs of the economy to move forward. The current

level of training’s focus on garment workers is ideal for a company looking to move production to this

country – or that wishes to source production from a factory in this country. There is a lack of skilled

applicants across occupations relevant to production in the country, such as technicians, managers, service

workers, and machine operators. (ADB 3) While there are thousands of available workers for unskilled,

manual labor, any positions requiring skilled workers are underserved and may need to be outsourced to fill.


Despite this, the cheap labor allows for cost-effective manufacturing, but the industry is unfortunately

challenged with productivity due to the referenced lack of skills, management, and infrastructure issues.

The minimum wage in Bangladesh is currently 5,641 Bangladeshi Taka (BDT) per month, the local

currency. (“World”) This equates to $68 USD monthly or $17 a week. Bangladeshi workers have only one

“weekly holiday,” which is Friday, so a 6-day work week reduces this amount to $2.83 per day. This

minimum wage was set in 2013 and has not been changed since that time, despite numerous calls to

increase this minimum wage to 16,000 BDT, which equals $192 USD per month, or $8 a day. (“Garment”)

This increase of 282% is supported by the IndustriALL Bangladesh Council (IBC), which represents worker

unions in the country. Despite this, the average monthly earnings are 12,915 BDT, or $155 USD per month.

(Worstall) As of 2016, the tax brackets begin taxing above 250,000 BDT (300,000 BDT for women and

seniors). Both minimum wage and average wage fall well below this rate. Minimum wage would be 67,692

BDT per year, and the average would come to 154,980 BDT per year. Even the proposed minimum wage hike

to 16,000 BDT per month only comes to 192,000 BDT per year and would still not receive an income tax.

(“Income”)

Bangladesh has a Ministry of Labour and Employment that is responsible for employment, and to

protect the interests of workers and human resource development in the country. This is the Bangladesh

equivalent to the Department of Labor. This ministry includes a Minimum Wage Board that dictates issues

included in the previous question, a Department of Labour, a Child Labour Unit, and an Inspector of

Factories and Establishments. (“Ministry”) There are also laws that regulate employment conditions,

working hours, minimum wage, employee leave, health and safety, and other compensation for injured

employees. These are laid out in the Bangladesh Labor Act of 2006 as well as its 2013 amendment, the Labor

Laws that were published in 2015. (“Labor”) In Bangladesh, there are areas that are called EPZs, or Export


Processing Zones. These zones are not regulated the same way in which the rest of the country is regulated.

Many of the laws that govern the country’s industry and manufacturing sectors do not apply to an EPZ. This

includes regulation on trade unions, as they are not allowed to be participated in for an EPZ. Unions often

are not regulated or protected in regular industry either. (“Labor”) This has caused numerous protests and

other workers’ rights issues between factory workers, the factory owners, and the government.

There have been numerous issues in the past regarding garment industry workers safety and working

environments in factory conditions. Five years ago, the collapse of the Rana Plaza factory in Dhaka, the

capital of Bangladesh, caused the loss of over 1100 factory workers’ lives (Bain). This caused a large social

outcry on a global scale, forcing companies who manufactured in Bangladesh to reassess their business

strategies and sourcing decisions in the country. Many signed onto either the Alliance for Bangladesh

Worker Safety or the Accord on Fire and Building Safety in Bangladesh (Bain). Both of these were legally

binding agreements for the companies that entered into them to ensure future safety of workers in the

garment industry of Bangladesh. Following these agreements, factories were required to undergo numerous

safety inspections and had to fix any outstanding issues. According to Marc Bain, “The Accord reports that

84% of the safety problems it identified in its initial factory inspections have now been fixed. The Alliance

says 89% of issues that were not in compliance with its standards have now been addressed.” Both of these

agreements were initially set to expire after 5 years, but the Accord has been renewed with minor changes

through 2021 with potential for further renewal if there is no governmental body ready to enforce their

rigorous conditions, and the Alliance is currently set to expire at the end of May 2018 (“FAQs”). The

difference in regulation of Bangladesh industry is that apparel companies stepped up to achieve the great

progress in worker safety and treatment as compared to governmental control in countries like the US.


Executive Summary Bangladesh

Bryan Kaetz | RTL 2005 – Global Sourcing | May 9th, 2018


PVH Corp. or Philips Van Heusen, is a Retail Trade and Clothing and Accessories Store,

with Tommy Hilfiger categorized specifically as a family clothing store under the NAICS category

of 448140 (“North”). The company is searching for a new factory to source its cut-and-sew

apparel manufacturing through. Bangladesh is a top contender for costing purposes, as it is

currently “the third-largest apparel manufacturing destination in the world” (Apparel). Sourcing

will be through a factory of the NAICS category 315210, focused on 315220: Men’s and Boys’

and 315240: Women’s, Girls’, and Infants’ (“North”). As a company, PVH needs to focus on

tightening sourcing efforts within this realm, eliminating any options that do not fit business

needs and purposes, from both a supply and manufacturing standpoint, but also from an ethical

and economically sustainable standpoint. With the Accord being renewed at the end of May, of

which PVH is a signatory, continued emphasis on these efforts will prove advantageous to our

company goals (“FAQs”).

The Bangladeshi government is committed to foreign investment through apparel

factories within the export processing zones (Apparel). Within these EPZs, there are no tariffs or

trade regulations to be concerned with and thus, shipping cost would be minimal. Due to low

labor costs in the country, cut-and-sew operations would also be comparably lower than other

locations PVH sources manufacturing from. There are approximately 1,430 textile mills

operating with a yarn production capacity of 4,630 million pounds per year and fabric

production capacity of 9,186 million feet (Apparel). Currently, the garment sector represents

about 82% of all export earnings in Bangladesh, showing their commitment and reliance on this

industry (Apparel).


On a global competitiveness level, Bangladesh is rated at a score of 99 (previously 106)

of 137 countries reported on the World Economic Forum’s Global Competitiveness Report,

giving it a score of 3.91 out of 7 (Schwab). This shows that Bangladesh is on its way to

improvement and becoming a true competitor in the global market. Primary education is a win

for Bangladesh, as is training in computing and agriculture, which will continue to support the

country’s economy (ADB). Higher education is a challenge in matching skills of workers with

needed jobs, but these skills are adequate for garment production and the needs of PVH

(Schwab). This market may provide challenges in consistent communication and other

infrastructural challenges that are currently undergoing advancements.

The final recommendation for entering Bangladesh would be to utilize manufacturing

partners in the export processing zones in order to source textile and apparel products. From a

Human Resources perspective, this may be a more difficult market to enter. There would be

challenges in the perception of the minimum wage, but with the average wage being higher

than this and the minimum wage at the point where it could rise, this has the means to change

in the future as the country moves to better position in regard to civil and human rights. While

this is occurring, PVH must remain vigilant in its commitment to sustainability and the fair

treatment of workers in Bangladesh. With the 127 readymade garment factories, or 82%, that

are compliant with the Accord initial remediation and 699 are at a 90% remediation level, it

would not prove difficult to choose a compliant facility to source PVH’s manufacturing from.

Overall, entrance into the Bangladesh market will likely prove to be much more advantageous

than not, especially from a cost perspective.

People’s Republic of BangladeshHuman Resource Manager

Country Statistics:• Language: Bangla/Bengali - 99% usage

• Religion: 89% Muslim, 10% Hindu, 1% Other (Buddhist & Christian)

• Capital: Dhaka

• Gained independence from West Pakistan December 16, 1971

• Government Type: Parliamentary Republic• 8 administrative divisions• Executive Branch includes the President as the Chief of State with the Prime Minister

as the head of government, and a cabinet• Legislative Branch includes the House of the Nation which consists of 350 seats• Judicial Branch has the Supreme Court of Bangladesh as the highest court,

organized into the Appellate Division of 7 justices and the High Court Division of 99 justices

Climate & Natural Resources:

• Sub-tropical monsoon climate with six seasons, three major ones being winter, summer, and monsoon

• Natural disasters are likely, including floods and tropical cyclones

• Natural resources include:• Agriculture is the biggest industry in the country, with garment production

coming at a close second• Rice and jute are primary crops• Moving to higher-value crops such as wheat

Infrastructure:

• Limited infrastructure, but growing.• Agricultural infrastructure includes extensive irrigation

• 87% of the population has access to clean drinking water sources

• Only 60% of the population has access to improved sanitation facilities, while 40% has access to unimproved facilities

• Only 60% of the population has access to electricity• Only 18% of the population has access to the internet

• Bangladesh has greater infrastructure in waterways and ports than roads as these serve the companies and business coming into the country versus the people that live there

Labor Statistics:

• Population: 157 million• Growth: 1.04%• Life Expectancy: 73 years

• Infant Mortality Rate: 3%

• Labor Force: • 73 million

• Unemployment Rate:• 4.1%

• Minimum Wage:• 5,641 Bangladesh Taka (BDT)• $68 USD/month• $816/year

• Average Wage:• 12,915 BDT• $155 USD/month• $1,860/year

Training & Education

• Literacy Rate: 73%

• 1/5 of Labor Force has no formal education

• 28% have up to primary education

• 30% have up to secondary education

• Training focused on computers, agriculture, & ready-made garments

Trade:

• Export processing zones – or EPZs - are set up throughout the country to allow for minimized trade regulations through eliminated tariffs and quotas

• Government greatly focuses on improving for foreign investment as this is where much of the government’s funds come from and industry goes to

• Regulations are also minimized in negative effect on factory workers in that trade unions are not legal and government works in favor of companies bringing business into the country

Alliance & Accord

• Rana Plaza in 2013• Dhaka: 1100 fatalities due to structural

issues

• Alliance for Bangladesh Worker Safety:• 28 companies• 89% compliance in 5 years• Alliance expires this month

• Accord on Fire and Building Safety:• Over 200 brands in over 20 countries• 84% compliance in 5 years• Accord has been extended through 2021

with and option to extend even longer

Final Company Decision

• Company:• PVH, Corp. – Tommy Hilfiger is a retail apparel family store

• Looking to source a cut-and-sew contractor for manufacturing

• Decision:• Enter the country by utilizing manufacturing partners in the export processing

zones in order to source textile and apparel products at a cheaper cost.

Works Cited• Apparel Resources. “8 Reasons to Invest in Bangladesh Apparel Industry.” Apparel Resources,

18 Apr. 2018, apparelresources.com/business-news/manufacturing/8-reasons-invest-

bangladesh-apparel-industry/.

• Bain, Marc, and Jenni Avins. “The Thing That Makes Bangladesh's Garment Industry Such a Huge Success Also Makes It Deadly.” Quartz, 24 Apr. 2015, qz.com/389741/the-thing-that-

makes-bangladeshs-garment-industry-such-a-huge-success-also-makes-it-deadly/.

• Bain, Marc. “Two Factory Disasters a Century Apart Show How Globalization Has Sapped

Labor's Power.” Quartz, 25 Apr. 2018, qz.com/1255041/two-garment-factory-disasters-a-

century-apart/.

• “Bangladesh Garment Workers Call for Increased Minimum Wage.” IndustriALL, Global Union,

5 Mar. 2018, www.industriall-union.org/bangladesh-garment-workers-call-for-increased-minimum-wage.

• “Bangladesh: Growing the Economy through Advances in Agriculture.” World Bank,

www.worldbank.org/en/results/2016/10/07/bangladesh-growing-economy-through-advances-in-agriculture.

• “Bangladesh - Income Tax.” KPMG, 8 June 2016, home.kpmg.com/xx/en/home/insights/2016/06/

bangladesh-income-tax.html.

• “Bangladesh Labor Policies & Practices.” Bangladesh Country Commercial Guide, Export.gov, 15 Nov. 2017, www.export.gov/article?id=Bangladesh-Labor.

• Bangladesh. U.S. Department of State, 10 Feb. 2016, www.state.gov/r/pa/ei/bgn/3452.htm.

• “Ministry of Labour and Employment.” Bangladesh Government, 22 Mar. 2018, www.mole.gov.bd/.

• Sunghobol, Duangvadee. “Country Emergency Situation Profile: Bangladesh.” World Health Organization. WHO: Bangladesh. http://www.searo.who.int/LinkFiles/Country_Emergency_

• Situation_Profiles_Bangladesh.pdf

• “Skills Development in Bangladesh.” Asian Development Bank - ADB Briefs, International Labor Organization, Manila: Oct. 2016, https://www.adb.org/sites/default/files/publication/203881/

skills-dev-bangladesh.pdf.

• “The World Factbook: BANGLADESH.” Central Intelligence Agency, Central Intelligence Agency,

24 Apr. 2018, www.cia.gov/library/publications/the-world-factbook/geos/bg.html.

• Worstall, Tim. “Nonsense About The Minimum And Living Wages In Bangladesh.” Forbes, Forbes Magazine, 28 Dec. 2016, www.forbes.com/sites/timworstall/2016/12/28/nonsense-

about-the-minimum-and-living-wages-in-bangladesh/#48b8b70f19a2.

http://www.industriall-union.org/bangladesh-garment-workers-call-for-increased-minimum-wage

http://www.export.gov/article%3Fid=Bangladesh-Labor


Works Cited

Apparel Resources. “8 Reasons to Invest in Bangladesh Apparel Industry.” Apparel Resources,

18 Apr. 2018, apparelresources.com/business-news/manufacturing/8-reasons-invest-

bangladesh-apparel-industry/.

Bain, Marc, and Jenni Avins. “The Thing That Makes Bangladesh's Garment Industry Such a

Huge Success Also Makes It Deadly.” Quartz, 24 Apr. 2015, qz.com/389741/the-thing-

that-makes-bangladeshs-garment-industry-such-a-huge-success-also-makes-it-deadly/.

Bain, Marc. “Two Factory Disasters a Century Apart Show How Globalization Has Sapped Labor's

Power.” Quartz, 25 Apr. 2018, qz.com/1255041/two-garment-factory-disasters-a-

century-apart/.

“Bangladesh Garment Workers Call for Increased Minimum Wage.” IndustriALL, Global Union,

5 Mar. 2018, www.industriall-union.org/bangladesh-garment-workers-call-for-

increased-minimum-wage.

“Bangladesh: Growing the Economy through Advances in Agriculture.” World Bank,

www.worldbank.org/en/results/2016/10/07/bangladesh-growing-economy-through-

advances-in-agriculture.

“Bangladesh - Income Tax.” KPMG, 8 June 2016, home.kpmg.com/xx/en/home/insights

/2016/06/bangladesh-income-tax.html.

“Bangladesh Labor Policies & Practices.” Bangladesh Country Commercial Guide, Export.gov, 15

Nov. 2017, www.export.gov/article?id=Bangladesh-Labor.

Bangladesh. U.S. Department of State, 10 Feb. 2016, www.state.gov/r/pa/ei/bgn/3452.htm.

“FAQs.” The Bangladesh Accord, Accord on Fire and Building Safety In Bangladesh, 2017,

bangladeshaccord.org/about/faqs/.


“Ministry of Labour and Employment.” Bangladesh Government, 22 Mar. 2018,

www.mole.gov.bd/.

“North American Industry Classification System (NAICS) Main Page.” U.S. Department of

Commerce, U.S. Census Bureau, 4 Apr. 2018, www.census.gov/eos/www/naics/.

Schwab, Klaus. “The Global Competitiveness Report: 2017-2018.” World Economic Forum, 26

September 2017. http://www3.weforum.org/docs/GCR2017-

2018/05FullReport/TheGlobalCompetitivenessReport2017%E2%80%932018.pdf

“Skills Development in Bangladesh.” Asian Development Bank - ADB Briefs, International Labor

Organization, Manila: Oct. 2016, https://www.adb.org/sites/default/files/publication/

203881/skills-dev-bangladesh.pdf.

Sunghobol, Duangvadee. “Country Emergency Situation Profile: Bangladesh.” World Health

Organization. WHO: Bangladesh. http://www.searo.who.int/LinkFiles/Country_

Emergency_Situation_Profiles_Bangladesh.pdf

“The World Factbook: BANGLADESH.” Central Intelligence Agency, Central Intelligence Agency,

24 Apr. 2018, www.cia.gov/library/publications/the-world-factbook/geos/bg.html.

Worstall, Tim. “Nonsense About The Minimum And Living Wages In Bangladesh.” Forbes,

Forbes Magazine, 28 Dec. 2016, www.forbes.com/sites/timworstall/2016/12/28/

nonsense-about-the-minimum-and-living-wages-in-bangladesh/#48b8b70f19a2.

K a e t z – S o u r c i n g A s s i g n m e n t s | 25

APPENDIX

1. Pre-Work Assignments

a. Assignment 1: Global Trade & Consumption . . . . . . . . . . . . . . . . . . . . . . . . . page 26

b. Assignment 2: Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 29

c. Assignment 3: The Multifiber Arrangement & Quotas . . . . . . . . . . . . . . . . . page 32

2. Objectives, Procedure, and Format . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 35

3. Area of Expertise Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 36

4. Pre-Work Assignment Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 37


Assignment 1

1. Develop a list of positives and negatives that the development of global trade brought

to textile industry and apparel industry in each of the following groups of countries:

a. Developed countries:

i. Positives:

1. Firms highly involved in all but manufacturing of the clothing –

including design, development, sourcing, and management.

2. Advanced textile production facilities due to advanced technology

and design functions kept domestically. These facilities export a

lot of their fibers, yarns, and fabrics, creating a trade surplus for

textile industries.

ii. Negatives:

1. Due to higher costs of labor, the actual manufacturing of the

product is outsourced, losing those manufacturing jobs and

revenues domestically.

2. A deficit in the clothing trade is caused by importing the finished

products/apparel the country no longer produces.

b. Developing countries:

i. Positives:

1. Industrialization has an overall good effect on improving

developing countries’ economies.

2. These countries import and export large amounts of textile and

apparel products, creating a good trade balance for economic

support.

ii. Negatives:

1. Further industrialization of newly-developing countries means

that developing countries are no longer the main source of cheap

labor.


2. These countries are considered to be in a transition phase and are

attempting to figure out their new place in the manufacturing

industry.

c. Newly-developing countries:

i. Positives:

1. All of these countries have a trade surplus in the apparel industry.

2. The industry creates a great number of jobs to allow citizens of

these countries to support their families.

ii. Negatives:

1. These countries are struggling to keep up with the demands of the

manufacturing industry – they tend not to have the resources

necessary to maintain support of this industry.

2. Lack of economic infrastructure makes communication, and trade

issues difficult to navigate in a timely manner.

2. What is the relationship between a standard of living and a level of consumption?

How do those concepts relate to the consumption of apparel?

A standard of living, or consumption, is defined by the text as “a level that is urgently

desired and strived for.” This also includes the working conditions, freedom of movement and

association, safety and security, and political and environmental atmosphere of a country. On

the other hand, the text defines a level of consumption as “the quantity and quality of goods

and services that are available to be used by an individual or group during a given period.” This

also includes the food, fuel, and other nondurable goods; houses, cars, clothing, and other

goods as such; and finally, the services people use.

The relationship between these two is significant. The level of consumption is what is

strived for in a standard of living. Thus, a country’s standard of living is based upon the level of

consumption, among other things. If the level of consumption declines, that means the goods

consumed decline in quantity or quality, and vice versa. Often, a standard of living or

consumption can be higher than the actual level of both of these – in that more expensive

products can be in a person’s desired state while not truly being achievable. We discussed this


in class regarding consumption behaviors and debt in that the American society in general is

living beyond their actual means.

These also relate to the consumption of apparel in that a standard of living generally

includes the desired level of consumption for textile and apparel goods. The consumption level

for these tends to increase as standards of living increase – that is, once a person has the

means for purchase of these products, their demand for these products also greatly increases.

This is an example in inelastic demand. Despite this, the change in demand for an apparel or

textile product is generally less than the change in a person’s income in terms of proportion.

People tend to want similar items whether they have the means for them or not.

3. Indicate what company (existing or one you have created) you will be researching for

the sourcing project and the category and subcategory of apparel.

a. The company I am using will be a mall-based specialty retailer/chain

organization, Tommy Hilfiger, which is a subsidiary of PVH Corp, considering an

apparel manufacturer’s factory in Bangladesh.

b. The category for the store is considered 44: Retail Trade, with a subcategory of

448: Clothing and Clothing Accessories Stores.

i. This can be further categorized to 4481: Clothing Stores – 448140: Family

Clothing Stores

c. On the other hand, the category for the factory would be 31: Manufacturing,

within the subcategory of 315: Apparel Manufacturing.

i. This can be further categorized to 3152: Cut and Sew Apparel

Manufacturing – 315210: Cut and Sew Apparel Contractors.

1. 315220: Men’s and Boys’ + 315240: Women’s, Girls’, and Infants’


Assignment 2 – Human Resource Manager: Bangladesh

1. Is there a minimum wage system in place in the country? Explain and give the details

of how employees are paid.

The minimum wage in Bangladesh is currently 5,641 Bangladeshi Taka (BDT) per month,

the local currency. This equates to $68 USD monthly or $17 a week. Bangladeshi workers have

only one “weekly holiday,” which is Friday, so a 6-day work week reduces this amount to $2.83

per day. This minimum wage was set in 2013 and has not been changed since that time, despite

numerous calls to increase this minimum wage to 16,000 BDT, which equals $192 USD per

month, or $8 a day. This increase of 282% is supported by the IndustriALL Bangladesh Council

(IBC), which represents worker unions in the country. Despite this, the average monthly

earnings are 12,915 BDT, or $155 USD per month.

All of this is over-the-table and reported as Bangladeshi workers do file tax returns. As of

2016, the tax brackets begin taxing above 250,000 BDT (300,000 BDT for women and seniors).

Both minimum wage and average wage fall well below this rate. Minimum wage would be

67,692 BDT per year, and the average would come to 154,980 BDT per year. Even the proposed

minimum wage hike to 16,000 BDT per month only comes to 192,000 BDT per year and would

still not receive an income tax. (Income)

2. Are there laws or a legal system in place to protect employees and a government

department that oversees them? (In the U.S. it is the Department of Labor). Describe

how the legal environment relates to human resources in the country.

Bangladesh has a Ministry of Labour and Employment that is responsible for

employment, and to protect the interests of workers and human resource development in the

country. This is the Bangladesh equivalent to the Department of Labor. This ministry includes a

Minimum Wage Board that dictates issues included in the previous question, a Department of

Labour, a Child Labour Unit, and an Inspector of Factories and Establishments.


There are also laws that regulate employment conditions, working hours, minimum

wage, employee leave, health and safety, and other compensation for injured employees.

These are laid out in the Bangladesh Labor Act of 2006 as well as its 2013 amendment, the

Labor Laws that were published in 2015. (These documents are 179 and 286 pages,

respectively.) Even though there are mandates and regulations, there are a lot of issues or lack

of equal governance of these mandates. Current issues include the minimum wage arguments,

which is governed by the Minimum Wages Board that makes suggestions to the government

regarding changing the minimum wage. This past December, numerous factories terminated

the employment of thousands of workers due to a strike over raising minimum wages. While

there are mandates regarding unions and striking, the government labeled these protests as

illegal, allowing these factories to fire this number of workers.

In Bangladesh, there are areas that are called EPZs, or Export Processing Zones. These

zones are not regulated the same way in which the rest of the country is regulated. Many of the

laws that govern the country’s industry and manufacturing sectors do not apply to an EPZ. This

includes regulation on trade unions, as they are not allowed to be participated in for an EPZ.

Unions often are not regulated or protected in regular industry either, as explained with the

recent terminations from December of last year.

3. What is the current level of labor force skills in the country? BE SPECIFIC as it relates to

the company you are representing.

The skills of the labor force in Bangladesh are varied. The majority of training is focused

on computing, agriculture, and ready-made garments. Little training is given in regard to leather

and textile, thus showing that this country does not develop textiles themselves and focuses on

the manufacturing of the end product to export (ADB 3). The education level of the workforce is

low, with over a fifth of the labor force having no formal education, but the majority (30%) has

up to secondary education yet another 28% only achieved up to a primary education (ADB 2).

Generally, the training and education received by the labor force in Bangladesh is not

consistent with the needs of the economy to move forward. The current level of training’s focus


on garment workers is ideal for a company looking to move production to this country – or that

wishes to source production from a factory in this country.

There is a lack of skilled applicants across occupations relevant to production in the

country, such as technicians, managers, service workers, and machine operators. (ADB 3) While

there are thousands of available workers for unskilled, manual labor, any positions requiring

skilled workers are underserved and may need to be outsourced to fill. Despite this, the cheap

labor allows for cost-effective manufacturing, but the industry is unfortunately challenged with

productivity due to the referenced lack of skills, management, and infrastructure issues.


Assignment 3

1. Why was the textile and apparel trade allowed to operate under the MFA in ways that

were contrary to GATT rules?

The Multifiber Arrangement (MFA) was created in 1974 under the General Agreement on

Tariffs and Trade (GATT), but operated under different trade restrictions because it was

considered an exception to GATT rules. The MFA came about following other agreements

through GATT, such as the Short-Term Arrangement & Long-Term Arrangement, at the behest

of developed countries, specifically the US. These agreements limited imports of textiles into

the US to restrict exports in Japan and other developing countries in an attempt to protect and

support the US textile industry. Truly, the negotiating and economic power of the US was the

reason behind the MFA coming about as it tended to support the economies and industries of

already-developed countries over the economies and markets in developing and newly-

developing countries of the time.

Due to this, many developing and newly-developing nations were forced to enter into

bilateral trade agreements with these developing countries such as the US and the UK, and

eventually the EU, to avoid restrictions that developed due to the MFA allowing unilateral trade

restraints. These bilateral agreements were then held to quota restrictions under the MFA on a

country-by-country, or agreement-by-agreement, basis.

2. Why were tariffs unable to control the textile and apparel trade? What do quotas do

that tariffs cannot?

Tariffs were unable to control the textile and apparel trade. This is because of the sheer

growth of the industry and trade. Slowly, the US began to create bilateral trade agreements

with specific countries to determine trade regulations. Prior to GATT in 1947 and even before

globalization truly became widespread, the US already had over 25 agreements overseeing

international trade. Eventually, these tariff-based agreements were not enough to control the

sheer amount of goods coming from then-developing countries in Asia such as China and Japan.

Then, the US and other developed countries began to negotiate agreements similar to the MFA


before the widespread acceptance of quota-based trade restriction with the negotiation of the

Multifiber Arrangement for 1974.

Quotas have an alternative effect in regard to trade restrictions. This is because they differ

from tariffs in that it simply limits the quantity or weight of specific goods that are imported

and exported. Even with a quota system in place, trade grew exponentially during an era of

great globalization, which likely grew even more due to the MFA. Manufacturers moved from

country to country for production under the MFA. Thus, while tariffs did not work to control the

textile and apparel trade, we have since learned that the quota system under the MFA also did

not work to reign in the growth of this trade.

Currently, multilateral trade agreements, or trading blocs, are increasing over bilateral

agreements that flourished both under GATT and MFA. The World Trade Organization is

attempting to remove the quota system of the MFA entirely and replace it with the ATC, or

Agreement on Textiles and Clothing. This is in response to the systems of both GATT and MFA

failing to do what was initially expected of or planned for them.

3. Why did the MFA not work?

The Multifiber Arrangement was based on a quota system, and this was very difficult to

sustain globally in the textile and apparel industry worldwide in a way that equally supported all

countries involved. The textile industry of the US and other countries grew so rapidly that

quotas were not able to be enforced despite the MFA. According to the text, during the

timeframe of 1973 to 2004, US textile imports grew from $2.3 billion to $83.3 billion. This was

also due to the more than 60 bilateral trade agreements that the US entered into with other

countries, circumventing some of the restrictions of the MFA. Despite these restrictions, the

MFA simply caused apparel production to constantly move from one undeveloped country to

the next undeveloped country. Manufacturers continued to try to find the lowest-cost

production from a labor standpoint before any bilateral agreements were created with that

country. Once production took off and exports in that country increased to attract these

developed countries into creating these bilateral agreements, and thus a quota system in that

country, manufacturers were forced to move to yet another country.


During the Uruguay round of trade negotiations, during the 1980s and 1990s, the World

Trade Organization was created to replace GATT, as well as the Textiles Monitoring Body and

the Agreement on Textiles and Clothing to replace MFA. The WTO was a permanent institution

whose members were bound to agreements and could no longer selectively-enforce specific

trade rules and regulations. This was a great departure from the operations of the MFA and has

since resulted in a number of free trade agreements on a multilateral scope.


RTL2005 GLOBAL SOURCING

SOURCING PROJECT – 100 Points

Dr. Egeln

Objective: To learn how to make informed sourcing decisions based on analyses of political,

economic, cultural, and trade characteristics of a country when sourcing a

product for a company.

Procedure:

1) Select a country from the list given in class and sign up for that country (only 1

student per country)

2) Select a position/category to research and analyze (Human Resource Manager,

Investment Risk Analyst, Product Development Specialist, Trade Specialist, Cultural

Analyst – see below for description)

3) Research the appropriate information.

4) Prepare an analysis of the information researched, including answering the questions

assigned.

5) Prepare an executive summary which includes your recommendation for your company

to enter the new country.

Format:

• Prepare a report (no longer than 4 pages, double spaced) that analyzes the information

researched and answers the questions for the position/category and country you

selected.

• A one page (not part of the 4pgs listed above), single spaced executive summary is to be

prepared.

• MLA format is required, in-text citations, and a works cited page is required. At least 3

acceptable resources are to be used.

• Project is to be submitted to Turnitin.com via Ulearn.

• A 5-8 minute presentation of the project is expected.



SOURCING PROJECT – 100 Points

Dr. Egeln

Select your area of expertise:

1. Human Resource Manager provides basic geographic data on the country that is

relevant to the textile and apparel industries/trade. It may include the big picture

overview of the country, such as its location, climate (e.g., possibility of natural

disasters), natural resources (e.g., clean water, electricity), and agricultural products

(e.g., cotton, flax, or wool). The HR manager researches the basic characteristics of the

country’s labor force (i.e., population, ethnic/racial heritage, language, religion,

education/literacy, level of the labor force skills), minimum/average wages in the

country, and how competitive they are on the global scale.

Countries to research:

Bangladesh



ASSIGNMENT #1 – 50 POINTS

Dr. Egeln

Answer the following questions in detail.

1. Develop a list of positives and negatives that the development of global trade brought

to textile industry and apparel industry in each of the following groups of countries: (a)

developed countries, (b) developing countries, and (c) newly developing countries.

Make sure to discuss the textile and apparel industry separately for each group of

countries. (list at least 2 positives and 2 negatives for each)

2. What is the relationship between a standard of living and a level of consumption? How

do those concepts relate to the consumption of apparel?

3. Indicate what company (existing or one you have created) you will be researching for

the sourcing project and the category and subcategory of apparel.

DUE AT THE BEGINNING OF CLASS, WEDNESDAY 3/26


RTL2005 GLOBAL SOURCING ASSIGNMENT #2 – 50 POINTS Dr. Egeln

Based on the area that you have selected for your final project:

Cultural Analyst –

1. What are the major cultural values and beliefs in the country?

2. What is the overall attitude toward work and job responsibilities?

3. What are special etiquettes that your client has to keep in mind when dealing with

people from this country (e.g., based on their religious and/or cultural background)?

Product Development Specialist –

1. Are the materials for the type of product you will be producing readily available locally?

If no, where will the materials be sourced from? Give specific details

2. What is the available labor skills in relation to the product you are developing?

3. What is the available equipment and the level of technology integration in the domestic

apparel industry?

Investment Risk Analyst -

1. What is the current currency exchange situation with the U.S.? Give details

2. Explain the current infrastructure of the country in relation to foreign investment.

3. Are there any current human rights investigations? If so, how would they affect the

products that you will be sourcing.

Human Resource Manager –

1. Is there a minimum wage system in place in the country? Explain and give the details of

how employees are paid.

2. Are there laws or a legal system in place to protect employees and a government

department that oversees them? (In the U.S. it is the Dept. of Labor). Describe how the

legal environment relates to human resources in the country.

3. What is the current level of labor force skills in the country? BE SPECIFIC as it relates to

the company you are representing.



ASSIGNMENT #3 – 50 POINTS

Dr. Egeln

Answer the following questions in detail.

1. Why was the textile and apparel trade allowed to operate under the MFA in ways that

were contrary to GATT rules?

2. Why were tariffs unable to control the textile and apparel trade? What do quotas do

that tariffs cannot?

3. Why did the MFA not work?

4. You are a US importer of baseball gloves, and you want to import two groups of baseball

gloves: 500 dozen, with a cost of $8.50 each, and 100 dozen, at a cost of $14 each.

Considering a 15% ad valorem tariff, what is the total duty due on each group? What is

the duty due on one unit in each group? (show your work or credit will not be given)

5. You did not do well with baseball gloves, so you switched over to importing designer

neckties from Italy. Fourteen ties equal one kilogram. Considering potential duties of

$0.0265 per kilogram and 13.5% ad valorem, calculate the total duty due on 900 dozen

ties, at $19 each. (show your work or credit will not be given)

DUE AT THE BEGINNING OF CLASS, WEDNESDAY 4/16

Documents

Sourcing Assignments - bryankaetz.files.wordpress.com